1. Tax Incidence in Thailand Jonathan Haughton
Suffolk University, Boston
For the World Bank.
May 11, 2011
2. The Questions Who bears the burden of taxes?
Who benefits from government spending?
What are the net effects?
Who would gain/lose under different possible tax reform packages, and by how much? May 11, 2011 JH: Tax & Expenditure Incidence in Peru Page 2
3. Example 1: Peru: Tax Revenue Central government tax revenue
11.6% of GDP in 2004
Buoyant since 2002
71% of revenue from indirect tax
Vat: 19% rate; but yields just 4.9% of GDP
Income tax: 3.4% of GDP May 11, 2011 JH: Tax & Expenditure Incidence in Peru Page 3
4. Example 2: VietnamCentral Government Revenue
5. Vietnam: Main taxes (% of GDP)
6. Vietnam: Noteworthy trends Revenue/GDP: 20% to 2000, now 25%
VAT: 7% of GDP (at 10% rate!)
Trade: from 4% to 2% of GDP, despite explosion of imports
All income tax: Peaked at 10% GDP in 2006, but dependent on SOE sector
NB: PIT raises 2% of revenue; surprisingly, not rising
8. Measuring Incidence (1) Step 1. Make assumptions about incidence
Statutory incidence ? Effective incidence
See Table May 11, 2011 JH: Tax & Expenditure Incidence in Peru Page 8
9. Incidence assumptions VAT: on consumers
Excises: on consumers
PIT: on earners
Business profits: on earners
Property transfer; local fees and contributions: on payers.
In this study, CIT, trade taxes, natural resource taxes, not included. Incidence covers half of revenue.
10. Partial equilibrium incidence